introduction a process of implementing and managing financial control systems, collecting financial...
TRANSCRIPT
INTRODUCTION• A process of implementing and managing
financial control systems, collecting financial data, analyzing financial reports, and making sound financial decisions based on the analyses. ...
Three key elements to the process of
financial management
• Financial Planning
• Financial Control
• Financial Decision-making
INTRODUCTION
• Global cash flows
• Foreign exchange risk management
• Capital expenditure analysis
• Capital budgeting
• Objectives of international financial management
Determining Parent-Subsidiary Relationships
• Polycentric solution
• Ethnocentric solution
• Geocentric solution
Common example of internal sources and flows of funds
Parent MNE
Chilean subsidiary
German subsidiary
Loan Interest payments
Loan
Interest payments
Dividends, Royalties and Fees
Equity capital investments
International Business Strategy in Action
• (NON-TRIAD) Tax heavens
• Fronting loans
• Multilateral netting
Foreign Exchange Risk Management
• Inflation• Addressing exchange rate fluctuations
– Translation exposure – Transaction exposure– Economic exposure
• Hedging strategies – Operating financial strategies – Forward exchange contracts – Currency options
• Developing forecasting and reporting systems
Capital Expenditure Analysis And
Capital Budgeting
• Use of net present value
• Institutional features– Government subsidies and controls
– Political risk insurance
Strategic International Finance
• Establishing overseas operations
• Reducing financial risk– Alliances
– Cost-cutting
Conclusion• International finance has an additional layer of
complication that involves currency risk and conversion, different laws, regulations, languages, and business practices
• Today, however, world production and trade are global in nature
• Therefore, financing is also global
• This leads to less market segmentation, more liquidity, and greater efficiency in world capital markets